International law firm Freshfields Bruckhaus Deringer has advised the Vitus group (whose shareholders include Deutsche Bank and Round Hill Capital) on the refinancing of its multi-family housing portfolio involving a €754m commercial mortgage backed securitisation (CMBS) and a new mezzanine loan provided by a major European institutional investor. Proceeds from the deal were used to refinance the loans made to the Vitus Group under a previous securitisation.
The transaction, which can be regarded as a landmark deal within the market, is the first new money euro-denominated CMBS since the start of the financial crisis.
The refinancing structure of the transaction contains a number of innovative features, including a 7-year CMBS tail period following scheduled loan maturity in October 2017. This will allow sufficient time for a protracted workout and substantial deleveraging to be implemented if required. In addition, the structure does not provide for a “controlling class” (which has typically been able to obstruct loan workouts against the wishes of the majority noteholders) instead it requires the servicer to consult with an ad hoc noteholder committee on material loan events.
Freshfields also advised Vitus on a German Pfandbriefbank debt (mortgage loan) structure as an alternative method for refinancing its senior debt which, although not ultimately used, would have been a viable alternative for Vitus.
Vitus Group, which was acquired by Round Hill Capital and a private consortium of investors in 2007, is a full-service German multifamily operating company. It owns 30,000 residential units in Northern and Western Germany and manages an additional 20,000 units for third-party investors.
Ben Lehrecke, CEO of Vitus commented: ‘Freshfields’ long-standing and effective working relationship with us, its excellent knowledge of our corporate, tax and structuring matters, a strong German real estate finance team, structured finance knowledge, as well as the support provided by its London team made the firm the right choice for Vitus and, ultimately, this landmark refinancing possible.’
London finance partner Ian Falconer said: ‘This transaction demonstrates that with careful structuring, the capital markets continue to offer successful funding solutions for large, complex commercial real estate portfolios.’
In supporting Vitus group, Freshfields fielded a cross-border team based in London and Germany which included finance partners Ian Falconer, Chris Barratt, Andreas Bartsch and Frank Laudenklos and senior associate Max Lang.
